Charles Schwab will acquire TD Ameritrade in a $26 billion, all-stock deal, the companies announced Monday, as the brokerage giants dramatically change a business model that has been crushed by the race to zero commissions.

The tie-up of the brokerage companies, which helped revolutionize stock trading by making it affordable and easy for the masses, reflects the shift from a commission-heavy revenue stream to one more reliant on interest income and other client services.

“These companies have figured out other ways to make money,” said Jeffrey DeMaso, director of research at Adviser Investments. “Commissions simply weren’t as big a piece of Schwab’s business and revenue. By going to zero, they weren’t giving up much. But everyone else had to follow them. In the short term, it looks like a savvy competitive move by Schwab. Longer term, we’ll see.”

The combined company is expected to serve 24 million brokerage accounts, overseeing more than $5 trillion in client assets.

“This would create a Goliath in wealth management,” wrote Wells Fargo’s Mike Mayo in an analyst note.

As part of the deal, the corporate headquarters of the combined company will eventually move to Schwab’s new campus in Westlake, Texas. Both companies have a presence in the Dallas-Fort Worth area.

Ameritrade stockholders will receive 1.08 Schwab shares for each Ameritrade share. The deal has been approved by the boards of both companies and the firms should be fully integrated in 18 to 36 months, after the deal closes.

San Francisco-based Schwab, the bigger of the two, is as much a bank as it is a brokerage firm. It manages more than $3.85 trillion in client assets, has a workforce of 19,500 and has a market cap of $60 billion. It makes most of its money — around 57% — from interest on the uninvested cash that people leave in their accounts. Schwab invests that money at a higher return than it pays its clients. It is expected to earn more than $3 billion in 2019 on more than $10 billion in revenue.

Omaha-based Ameritrade is a $26.2 billion company with more than $1.3 trillion in assets. With Monday’s announcement, Ameritrade said it would suspend its search for a chief executive and named Stephen Boyle, its chief financial officer, as interim president and CEO.

The acquisition comes as financial management companies — from mutual fund giants like Fidelity Investments, to Schwab and Ameritrade — scramble to gain client share and assets by offering free trades. The competition has been heightened by retail investors choosing low- and zero-cost index funds and leaving the stock-picking market.

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